The construction industry in the United States is a vital part of the economy. It employs millions of people and contributes trillions of dollars to the GDP. However, the industry is struggling with significantly smaller construction firms.
There are about three million construction firms in the country, most of which took a huge hit during the pandemic. As a result, they were forced to lay off workers and close their doors. Some of these companies are at a crossroads, especially now that they don’t have money to purchase construction equipment. Thankfully, there’s a solution: construction equipment rental.
Renting construction equipment is nothing new, but it’s becoming increasingly popular as construction firms search for ways to save money. Not only is renting more cost-effective than buying, but it also gives construction firms the flexibility to choose the right equipment for each job, rather than being stuck with a piece of machinery that might not be the best fit.
If you’re thinking about starting a construction equipment rental business, here are four ways you can make it successful:
Start Small
Every successful construction equipment rental business starts small. Here are the essentials of starting small:
Purchase Smaller Pieces of Equipment
The average cost of an excavator is around $50,000 to $250,000, but that depends entirely on size. Not many contractors need a $250,000 excavator. Most of the time, they can get by with a smaller, less expensive model.
Additionally, if you’re planning to have a fleet, start with the essentials like excavators, skid steers, and backhoes. Then, as your business grows, you can add to your fleet.
Think about what pieces of equipment are most in demand in your area and start there.
Have Zero Employees
The average salary in the United States is $52,863 per year. If you’re starting, you can’t afford to have full-time employees. Imagine paying for ten employees in your company. That’ll cost about $528,630 annually, which is a lot of money for a small business.
The good news is that you don’t need employees. Instead, hire independent contractors. This way, you only have to pay them when you have to work for them. In addition, you don’t have to worry about benefits or other associated costs.
Rent Office and Storage Space
When you’re first starting out, it doesn’t make sense to purchase office and storage space. Instead, you can save a lot of money by renting both.
As your business grows, you can reevaluate and decide if you need to purchase an office and storage space.
By starting small, you can save a lot of money, which is essential for any successful business.
Do Your Equipment Repairs
Your equipment will eventually wear down over time and encounter problems. When this happens, you have two options: repair the equipment or hire someone to do it for you.
Hiring someone to do repairs is very costly. So instead, start to learn to do your equipment repairs.
When doing your repairs, you’re going to need parts. Investing in affordable aftermarket construction equipment parts is a great way to save money. It’s because aftermarket parts are cheaper than OEM parts. Essentially, aftermarket parts are manufactured by independent companies, not the original equipment manufacturer. They undergo rigorous testing to ensure they meet the original equipment manufacturer’s standards.
You can also join an online community of other construction equipment owners and learn from them. Doing your repairs is a great way to save money and keep your business successful.
Keep Detailed Records
Every successful business keeps detailed records. This includes receipts, invoices, contracts, and more. It’s essential to keep track of everything for tax purposes and your records.
When you have detailed records, you can go back and look at what’s worked in the past and what hasn’t. You can also use your records to plan for the future. Without detailed records, making informed decisions about your business is challenging.
Keep Track of Your Fleet
If you have a fleet of construction equipment, it’s essential to keep track of it. There are a few ways you can do this:
GPS Tracking
One way to keep track of your fleet is by using GPS tracking. This allows you to see where your equipment is at all times. Additionally, some GPS tracking systems allow you to set up geofences. Geofences are virtual boundaries that send an alert when the equipment enters or leaves the boundary.
This is a great way to track your equipment and ensure it’s being used properly.
Maintenance Logs
Another way to keep track of your fleet is by maintaining detailed maintenance logs. For example, you should log every time maintenance is performed on each piece of equipment. This includes oil changes, tire rotations, and more.
By keeping track of your fleet, you can ensure that your equipment is being used appropriately and is well-maintained. This will help prolong the life of your equipment and save you money in the long run.
Following these four tips can make your construction equipment rental business successful. The best construction equipment in the world is worthless if you’re not making money. Use these tips to ensure your business is gaining revenue.
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